EX-WEDTECH AIDES SAID TO IMPLICATE BIAGGI AND SIMON

By JOSH BARBANEL

Published: February 4, 1987

Former top executives of the Wedtech Corporation, a South Bronx military contractor, told Federal investigators last week that they had made payoffs to 20 government officials, including two Bronx Congressmen and Borough President Stanley Simon, law-enforcement officials said yesterday.

The executives provided details of the payoffs after secretly pleading guilty last week to a sealed Federal indictment charging them with forging millions of dollars in invoices submitted to the Government in 1981 and 1982, according to officials.

Among those said to be implicated by the former executives are Representatives Mario Biaggi and Robert Garcia, both Bronx Democrats; a relative of former Representative Parren J. Mitchell of Baltimore, as well as government officials who approved and monitored the company's military contracts. Pleas Due Today

As part of their arrangement with the Government, the former Wedtech officials are scheduled to plead guilty to felony charges today in State Supreme Court in Manhattan and the Bronx, according to law-enforcement officials.

In addition, several officials familiar with the case, said that Maj. General Vito Castellano, the former commander of the New York National Guard and Governor Cuomo's former chief of staff, has been ordered to surrender in State Supreme Court in Manhattan in connection with a bribery indictment involving Wedtech.

Efforts to reach General Castellano last night at his home in Washington were unsuccessful.

Lawyers familiar with the case said that, in an effort to win leniency, the former executives told of providing favors, trips, gifts of stock and other payments to influential officials. Those practices, they said, helped transform the company from a small South Bronx machine shop to a $100 million-a-year business.

In December, the company, citing losses and financing difficulties it tied to the scandal, dismissed 1,500 workers and filed for protection under Chapter 11 of Federal bankruptcy laws. It recently hired a new management team and resumed limited operations.

Many details of the statements by the former company officials are not known, but lawyers familiar with the case said the statements appeared to open a new chapter in the continuing corruption scandal in New York City.

The scandal, which began to unfold in Queens last year with the suicide of former Borough President Donald R. Manes, grew to involve city contractors, former city officials, and political leaders, including the Bronx Democratic chairman, Stanley M. Friedman. He and four other men were convicted last November of racketeering in connection with the city's Parking Violations Bureau.

In statements issued by their press spokesmen or lawyers, the Bronx officials under investigation in the Wedtech inquiry denied wrongdoing.

''I again emphatically deny all allegations of wrongdoing,'' Mr. Biaggi said. ''I consider this to be judicial speculation lacking in substance.'' 'The Truth Will Not Hurt Me'

Robert Morillo, an attorney for Mr. Garcia, said, ''He acted at all times in a manner that was consistent with the interests of his district and with the law.''

The former Wedtech officials were identified as Fred Neuberger, former chairman of the board; Mario Moreno, the former vice chairman of the board; Anthony Guariglia, the former president and chief operating officer, and Lawrence Shorten, the former executive vice president.

On Monday, a three-judge Federal panel appointed James C. McKay, a Washington lawyer, to determine if Lyn Nofziger, a former aide to President Reagan, violated Federal ethics laws when he lobbied the White House on behalf of Wedtech shortly after leaving office in 1983.

Wedtech has been at the center of a series of Federal and state investigations for months, but in the last few days, officials said, the pace has quickened as a flurry of Federal grand jury subpoenas have been issued.

In Washington, agents of the Federal Bureau of Investigation were called in yesterday to interview several staff members of the House Committee on Small Business, where Mr. Mitchell served as chairman.

Justice Department officials in Washington said they had not been informed of any impending indictments, and lawyers familiar with the case said they did not expect any indictments in the immediate future.

Wedtech was a small struggling company until it entered a Small Business Administration program for minority-owned businesses in 1975. Over the next 11 years it received $250 million in contracts from the Government without competitive bidding. $60,000 in Payments According to an official familiar with the case, Mr. Garcia was said to have accepted as much as $60,000 from company officials in exchange for helping them obtain Government loans and contracts in the early 1980's.

In an interview several years ago, Mr. Garcia said he helped the company because it was providing jobs in his district.

The former company officials said they paid for a trip by Mr. Simon ''to a southern location'' and gave him additional remuneration, according to officials close to the investigation.

City officials have said that Mr. Simon's office played a key role in 1983 in expediting a request by Wedtech to lease city-owned land it needed to compete for a contract to make pontoon causeways. In addition, Mr. Simon has acknowledged that Wedtech hired his brother-in-law as an administrator in the same period.

The officials said they hired Biaggi & Ehrlich, a law firm associated with Mr. Biaggi, as a payment for his continued support for the company's effort to win contracts. Mr. Biaggi's son Richard, and his law partner, Bernard C. Ehrlich, each received Wedtech stock worth more than $1.7 million when the company went public in 1983.

Law-enforcement officials said an indictment of Mr. Biaggi on unrelated charges in connection with his efforts to help a Brooklyn company, Coastal Dry Dock, was imminent.

In addition, Mr. Ehrlich, a former general in the Army National Guard, was indicted last month on charges of accepting a payoff to help Citisource Inc., a company, now defunct, that was implicated in the city corruption scandal, sell hand-held computers to the New York State Militia.

The former company officials were also said to have told prosecutors that they paid $100,000 in legal fees to Mitchell, Mitchell & Mitchell, a law firm headed by a nephew of Representative Mitchell, in an effort to block an investigation of Wedtech by Mr. Mitchell's House committee.

In the past, investigators said they had no evidence that former Representative Mitchell was aware of the purported bribe and did anything to stop the investigation. It is not known whether the new information contradicted this, and the United States Attorney in Baltimore, Breckinridge L. Wilcox, issued an unusual statement yesterday saying former Representative Mitchell was not a target of any investigation.